Email this article

American International Group was booted from a very elite group Thursday when Standard & Poor’s lowered the insurance giant’s senior debt ratings to AA-plus, down from AAA.

AIG had enjoyed its AAA rating for 22 years and had been just one of eight US companies to hold the top rating from both S&P or Moody’s, according to Bloomberg.

S&P also dropped the rating on AIG’s preferred stock, down to AA-minus from AA. In addition, the rating agency lowered AIG’s counterparty credit and financial strength ratings on most of the insurer’s wholly owned subsidiaries to AA-plus from AAA.

Recommended Stories:

All of these ratings remain on CreditWatch with negative implications, the rating agency added.

S&P said AIG’s A-1-plus short-term ratings are unaffected.

“These rating actions follow AIG’s announcement that the filing of its 10-K will be delayed further,” S&P noted in a press release. The credit assessor also cited AIG’s announcement Wednesday that the insurer will decrease its shareholders’ equity by about $1.7 billion.

The lower ratings mean that AIG will pay more in interest on future borrowings.

Moreover, AIG’s business position and practices could be weakened as regulators respond to continuing findings from ongoing internal and external probes, the rating agency added.

“Similarly, with the sharp drop in market capitalization, Standard & Poor’s is concerned that management’s attention will be diverted from rebuilding its financial services franchise to dealing with legal and regulatory issues,” S&P added.

“Understandably, we are disappointed by these actions,” AIG spokesman Joseph Norton told Bloomberg. “However, we don’t believe they will have a significant impact on our business or our ability to serve customers.”

Moody’s has yet to take any action since news broke of AIG’s accounting discrepancies.